elping ClientsIn Retirement Years

Financial Planning Association – Dallas ChapterNovember 12, 2013

Dr. Jeffrey W. Steed, MBASenior Director of Gift

PlanningThe University of Texas at

Arlington HCase Studies Involving Gift

Planning

Retirement Years...

Traveling Carefree

Transitioning

Retirement Years...

Without Time Constraints

Retirement Years...

Being Prepared

Retirement Years...

Staying Independent

Retirement Years...

Enjoying Life

Retirement Years...

Financially Managing

Retirement Years...

How can advisors help clients in their

retirement years using gift planning tools?

Retirement Years...

Helping Clients in Retirement Years

Agenda1. Impacting Through A Legacy Gift2. Funding Retirement Living3. Maximizing Annual IRA

Distributions4. Diversifying a Retirement

Portfolio5. Increasing Retirement Income

Securely6. Reducing/Avoiding Gift Tax

FUNDING RETIREMENT LIVING

Step #1Mr. and Mrs. Page establish an

endowment through their Last Will and Testament or Revocable Trust.

They do not feel that they can prudently give away major gifts

during retirement due to a minimal estate size.

Step #2At their passing, charity receives

income payments every year for

student scholarships.

RESULT: Their impact on the lives of charity continues

perpetually.

Impacting Through A Legacy Gift The Page

Endowed Scholarsh

ip

Helping Clients in Retirement Years

FUNDING RETIREMENT LIVING

Step #1Mr. and Mrs. Johnson establish a

Charitable Remainder Trust (CRT) and give their farm to the

CRT.

Establish the Johnson

Charitable Remainder

Trust

Step #2After the CRT sells the farm,

income is distributed periodically to Mr. and Mrs. Johnson to fund

retirement living.

After Mr. And Mrs. Johnson pass away, charity receives the

CRT remainder.

Funding Retirement Living

Step #3

Helping Clients in Retirement Years

FUNDING RETIREMENT LIVING

Step #1Mrs. Lyle (“non-itemizer tax

filer“) contacts her IRA custodian for a qualified charitable distribution.

IRA Custodi

an

Step #2IRA custodian mails a check

directly to charity.

RESULT: Mrs. Lyle benefits charity with pre-tax dollars and does not pay tax on the amount. NOTES:- Donor must be

70.5+- Benefit ends

12/31/13- Maximum:

$100,000- Qualifies for MRD

Maximizing Annual IRA Distributions

Helping Clients in Retirement Years

FUNDING RETIREMENT LIVING

Step #1Mr. May establishes a Charitable

Remainder Trust (CRT) and gives a concentrated, appreciated stock

position (or other asset) to the CRT without capital gain taxes initially.

Establishes the May

Charitable Remainder

Trust

Step #2The CRT sells the stock,

diversifies the CRT portfolio and income is distributed

periodically to Mr. May.

After Mr. May passes away, charity receives

the CRT remainder.

Diversifying a Retirement Portfolio

Step #3

Helping Clients in Retirement Years

FUNDING RETIREMENT LIVINGCHARITABLE GIFT ANNUITY (CGA):

Mrs. Wright (age 70) establishes a

$100,000 CGA at 5.10% ($5100

annually)

The CGA allows for Mrs. Wright to have an initial partial income tax

deduction and provides $5100 annually in income to her.

After Mrs. Wright passes away, charity

receives the CGA remainder.

Increasing Retirement Income SecurelySTATUS QUO:

Mrs. Wright purchases a five-year $100,000 CD at 1.50% ($1500

annually).

OR

Helping Clients in Retirement Years

Desire to pass company to children (C-Corp) with minimal tax No pre-sale agreements exist FLP owns 99% LP interest, while donor keeps 1% GP interest until

death (stepped-up at death to children) Discounted valuation of LP interest by qualified appraisal No active participation by the FLP or GP in the C-corporation and

no debt Various types of Lead Trusts – this is a non-grantor lead trust

(Family Lead Trust). Donor has other assets for retirement Appreciation of assets in Trust not taxable

Charitable Lead Annuity TrustFacts/Assumptions

Reducing/Avoiding Gift Tax

(Or 10% of $2,200,000)

#2

#1

#3

#4

#5

At Samantha’s death, the remaining 1% GP interest

is distributed to family (stepped-up costs basis)

#6

Potential Gift Planning Solutions:

1. An individual does not feel that he/she can give much to charity while living due to a minimal estate size, but he/she is charitable. »Bequest gift?

2. An individual is wanting to sell her/his farm in order to move to a retirement center. »Charitable Remainder Trust?

3. An individual complains about being forced to take a taxable IRA distribution. »IRA Charitable Rollover?

4. A client mentions that most of their portfolio is tied up in one stock – possibly employer stock. »Charitable Remainder Trust?

5. A client is concerned about CD rates. »Charitable Gift Annuity?

6. A client desires to distribute closely held stock to children with reduced/eliminated gift tax. »Charitable Lead Trust?

Helping Clients in Retirement Years

Questions?

Helping Clients in Retirement Years

Dr. Jeffrey W. Steed, MBASenior Director of Gift

PlanningThe University of Texas at

Arlington(817) 272-9682steed@uta.edu

Case Studies Involving Gift Planning